Martha Stewart was indicted on obstruction, not securities fraud.

DOJ usually respects settlements with regulatory agencies. FTC for antitrust cases and SEC for securities cases. This is really not factually up for debate.

Again, I only dispute your "usually" - Martha was charged with insider trading by the DOJ but that charge dropped, and yes she did time for obstruction.

Look up Trendon Shavers, a guy who ran a bitcoin ponzi. Charged by SEC, then DOJ and did about 2 years in prison. How many more do ya want?

And of course Bernie Madoff, charged by SEC and DOJ.

Ponzi cases are very far end of the criminal fraud spectrum. They straight up make up numbers and present them as true. Musk pushes the boundaries of GAAP and projections but his numbers, as reported to SEC, have no indication of being outright frauds.

Again, as I have explained before this is just not the type of thing DOJ would go after in the vast majority of cases. DOJ is even less likely to spend resources on this with SEC settlement in place.

I am just telling you this this how DOJ and SEC behave. You can use whatever anecdotal evidence you want but anyone with a passing familiarity with sec and doj enforcement would agree with what I have said in the last few posts.

If you read the SEC complaint, there is a pretty clear cause for fraud - there was no "funding secured". The DOJ loves high profile/celebrity white collar cases because it gets news coverage showing they are "doing their jobs" and "nobody is above the law".

Recent news coverage showing white collar crime prosecutions being down are extra pressure to bring a high profile case. It's the perfect fit, so we'll see.

"Deputy Attorney General Rod Rosenstein said Wednesday that the Trump administration was committed to fighting white-collar crime and pointed to recent cases alleging health-care and securities fraud."

zzzzzz hope i'm wrong but SEC not gonna do anything bout most recent tweets and nice bounce off 250 is this just gonna do the standard rally back to $300~??

2 more days of this and right back to $300. Then Q3 pump on the best possible numbers they can provide, but probably can't get much past $325.

Then the fun ride begins as Q4 is a disaster, possible DOJ atom bomb, and January debt payments that they can't pay. Going to be a fun 3 months.

We know they've been stiffing suppliers and today there was the news of a judgment for monies owed to the government for unpaid unemployment taxes: https://twitter.com/Paul_M_Huettner/...083625990?s=19

Skabooshka also reporting the factory was quiet this weekend possibly to avoid overtime pay.

Tooth has talked a lot about suppliers demanding COD but it doesn't seem like that would ever be in a supplier's best interest. Maybe instead the bitter end is failure to make payroll?

Payroll is steep with all the OT in Q3, but it's still small compared to the debt payments they need to make in January. Just not possible without a fundraising round which is a longshot and would crush equity.

It's not a bank run if you're the first to get your money out.

I find it unbelievable as well that Tesla can't find a way to raise. But the pattern of a large number of unpaid bills - suddenly in the last two quarters + trying to get cashback from suppliers and 90+ day payment terms + slowing production + pushing customer refunds out to 63 days + taking full payment with a delivery date and repeatedly not delivering + mortgaging the very last of their factory and forward lease revenue + Musk acting like a man under extreme stress/obsessed with shorts "winning" + capex reductions + their history of raising and keeping a nice cushion, make no sense whatsoever if they have any ability to raise.

edit: And if this isn't the biggest red flag in the whole thing, their ENTIRE accounting team leaving in the last six months despite Tesla paying multiples of industry pay and generous stock options which they left behind...

White collar prosecutions are down because of a few recent court of appeals rulings that raised the bar.

I'm just not sure you can count on Sessions/Trump to follow precedent and there is a colorable case against Musk. I definitely agreee the case would not have been pursued in the past. It's a DOJ decision, not judge or SEC.

Regarding the SEC settlement, there is likely no upside to the judge accepting the agreement, but there is massive downside if the judge rejects it. Seems like a freeroll if you can short now and exit the position before Q3 pump. I'd also say that a judge rejecting this agreement would be likely to be overturned on appeal so that would be a tradeable event too.

Trump doesn't care.

Sessions and DOJ lawyers don't want to risk losing and making even worse precedents. Musk's situation is not even close to a slam dunk for the DOJ and presents novel legal issues that DOJ does not want to deal with right now, at least not without an otherwise slam dunk case.

By "novel legal issues" I assume you mean you think tweets (followed by supporting emails) might have some kind of immunity to the law which is just laughable. It's a slam dunk case.

It's not immunity. But it's an additional risk. Like I said before, DOJ/SEC have been reluctant to sue due to recent precedents and they are afraid to lose the presumption of fraud on market, which is the theory underpinning class actions and most of SEC/DOJ's 10b-5 claims.

Even with outright accounting frauds, some claims have been dismissed (circuit split on some issues) due to failure to show causation/harm. If you really care, search Dura Pharmaceutical (SCOTUS) and its progenies. I had to do the same for a sec reg class and, like most of my class and the professor, found the whole thing kind of ridiculous. At the same time, nobody really knew what standards would be fair and still not create a situation where everytime someone loses money on a stock, they could nitpick some accounting/reporting/projection error and file a fraud suit.

Again, I am not saying if it's a good law/policy/situation or not. I am just telling you that given the legal backdrop, Musk's case is not even close to being a slam dunk. You can make a policy argument that it's ridiculous that Musk's tweets aren't enough for a slam dunk 10b-5 securities fraud case. Proving those tweets are frauds under current law is a totally different ball game.

A plain reading of Dura shows it to be irrelevant to this case.

In Musk's case there is clear causation (the fraudulent tweet) and clear directly-caused economic loss - the instant spike/forced covering, or the subsequent drop when the truth became known days later (less clear).

In Dura they didn't even show any economic loss. They merely sued for an "inflated price". The complaint itself was poorly crafted.

Dura is irrelevant. I have no idea about the other things you claim, but your citing of Dura as relevant to DOJ decisions about whether to go forward puts your claims in the suspicious basket.

Dura was a 2005 case it isn't new. And it was a unanimous decision with no novel legal issues it just says you need proximate cause like any other tort claim for the last 400 years. Basic logic and statistics tell us that in order to prove causation we need to rule out confounding factors that could be causing a spurious (hehehe) relationship between misrepresentation/corrective disclosure and stock price decline.

Trump's inactive SEC is a policy preference that has nothing to do with fear of setting bad precedent. They want to be hands off to support free enterprise.

Yeah, exactly. All they need to do is have a statistician do an event study and appear as an expert witness. Not exactly an insurmountable hurdle.

So assuming that they can't raise for some reason- what does the bank run look like?

Without enough cash to go around Tesla has clearly been prioritizing payments- it has even been reported that Elon himself signs off on all expenditures over a certain dollar amount. I posit this is because he knows who he can stiff and who he cannot.

Musk's Hierarchy of Needs:

1. Payroll
2. Bond repayments
3. Essential suppliers with leverage over Tesla- Panasonic?
4. Non-essential suppliers- Union Pacific, smaller manufacturers, truck drivers...
5. Customer refunds
6. Government/taxes
7. Allocating for future costs like repairs under warranty, legal expenses, etc.

March

Dura is literally THE 10b-5 SCOTUS case that lower courts are citing to determine standards on causation/harm. Even those cases that don't seem to fit Dura's fact pattern, which Musk's case doesn't, are going to be decided based on interpretations of Dura. If you don't recognize this, you just don't understand how US federal courts work.

I wasn't just referring to the tweets as novel/contested issues. There is also the issue that it wasn't Musk's disclosure of bad info that caused prices to spike (it was everyone else, aka the market, that quickly realized Musk was probably FOS).

There is also the problem of separating out the impact of the information regarding the buyout vs. the impact of speculation that Musk was going to be in trouble with SEC/DOJ. As ridiculous as it may seem to people with common sense, plaintiffs have lost due to inability to separate out the portion of stock price change attributable to the information disclosed (misleadingly) vs. information inferred by the market.

Those are just two that immediately come to mind. There are more surrounding Musk tweets. A lot of the issues have come up numerous times before but they remain unsettled because litigants settle and there are splits in district courts and appeals courts.

New Departures:



It is starting to feel like there is no 'irresponsible' level of hi strike 2020 puts exposure.

who is even there to do the work at this point?

idk how relevant a lot of those are. What does the normal attrition look like in a comparable company? I get CAO stepping down was a big deal, but I don't think we can point at every director that quits and call it a signal

Has shortie twitter (or anyone) tried to figure out what stock options these people left on the table? Could be a signal depending...

Ya its all over the place


Morton, CAO had 10m worth of options with 4 year vest, wheeler had something similar. Directors info isnt out there but you can assume its probably at par or higher, probably 250 base/bonus and maybe 500k in options w 4 year vest, just guessing. Sr directors maybe a small amount higher.



I know accounting probably doesnt get a ton of respect in a lot of businesses, but to run a company as complex as Tesla is already really hard, now imagine have cars moved around to random places be driven by random service level people, constant turnover in operational roles causing policy enforcement/documentation to be inconsistent, vins being added then removed, customer cars being sold to different people, constant procedural changes for building the cars with parts you need to track and capitalize for every car, add the strain of standard audits of a public company but also add multiple SEC investigations which adds burden to an accounting department, add a CEO who meddles in the numbers and presentation, a CFO who doesnt even have an accounting degree or CPA and likely is just the CEOs lapdog, AND FINALLY add a ton of accounting and finance turnover.


Their books must be total trash, and not intentionally, just impossible to hold it together with all that going on.

They do have some good news:

https://www.bloomberg.com/news/artic...selling-sedans